India has been hit by dumping of sheet glass from China: What about the larger issues?
A Newsroom24x7 Exclusive
A close look at the findings of a Government of India Authority, leads to the obvious inference that an import racket has been operating in India in collusion with exporters in China and as a consequence domestic industry has suffered losses and big money that should have been collected by the Government of India as customs duty has been pocketed by unscrupulous importers who have been hoodwinking the system for a long period of time.
The case in point relates to “sheet glass” exported to India from China. An Authority designated by Government of India that looked into the import of sheet glass has come to the conclusion in its final findings that the “subject goods” falling under Chapter 70 of the First Schedule to the Customs Tariff Act, 1975 (51 of 1975) was being exported to India from China below its normal value, thus resulting in dumping of the subject goods. Another serious conclusion drawn by the “designated authority” is that the domestic industry has suffered material injury due to dumping of sheet glass in India from China.
The investigation was conducted by the designated Authority in response to an application filed by Bharat Glass Tube Limited filed on behalf of the domestic industry, alleging dumping of Sheet Glass originating in or exported from China PR. The Authority was requested for initiation of anti-dumping investigations for levy of anti-dumping duty on the imports of the subject goods.
Questionnaires were sent to following Chinese companies:
- Shandong Guangyao Super-Thin Glass Co., Ltd
- Shouguang Yaobang Imp. & Exp. Industry Co., Ltd
- Dongguan CSG Architectural Glass Co., Ltd
- Guangxi Fungrich Imp & Exporter C., Ltd
The Importers covered during investigation were:
- Tech Arch Solutions
- Polar Industrial Corporation
- Shiv Shakti Enterprises
- Krishan Glass Work Pvt Ltd
- Ganga Jamuna Enterprises
- J.K. Sales Corporation
- Shiv Corporation
- Ajanta Limited
- Rikon Clock Manufacturing Company
- Shriji Engineering
Sheet Glass is produced by using a horizontal lehr (a temperature-controlled kiln for annealing objects made of glass). The glass is taken directly from the free surface of the melt and the edges of the sheet are stabilized by driving the glass upward using rotating bodies. The molten glass passes from the glass furnace to a vertical drawing machine to a height of about 1000 MM from where the formed glass is converted into glass sheet by horizontal flow. Once the sheet is formed, it is bent over a polished metal roll and carried away horizontally into a lehr. Float glass, figured and wired glass were not covered within the scope of Product under investigation.
Domestic industry submitted before the designated Authority that sheet and float glass should not be considered as “like product” as sheet glass and float glass are two distinct products having different technical characteristics, prices and costs. Further, it was submitted that in the past also the Authority had initiated and recommended anti-dumping duty on float glass but sheet glass was never included within the scope of PUC for the simple reason that technical characteristics, prices, marketability and costs of both these products were different. In order to substantiate their claim in this context, the domestic industry cited relevant portion from the Final Findings No. 15/01/2007-DGAD of December 2, 2008 against the imports of Float Glass from China PR and Indonesia.
During investigation it was revealed that one company – Shouguang Yaobang Imp. & Exp. Industry Co., Ltd. China PR (Exporter) had furnished completely contradictory and misleading information. While in response to a question, the Chinese exporter stated that they were not engaged in the domestic sales. Whereas, in response to another query in the context of information related to third country exports, the exporter replied “Not applicable as Shouguang
Yaobang submits that its normal value shall be based on the sales in domestic market”, thereby accepting the fact that they were not engaged in domestic sales.
Based on its findings published in the Gazette of India, Extraordinary on December 19, 2014, the designated authority recommended imposition of definitive anti-dumping duty on imports of sheet glass originating in or exported from China and imported into India to “remove injury to the domestic industry.” Considering the final findings of the designated authority, The Government of India on March 13 this year issued the notification to impose definitive anti-dumping duty on sheet glass. The anti-dumping duty that has been imposed in March this year will be effective for a period of five years (unless revoked, superseded or amended earlier) from the date of publication of the notification in the Official Gazette and shall be paid in Indian currency.
This is an open and shut case as it depicts inherent weaknesses in the working of the Central Customs and Excise and Department of Revenue under the Ministry of Finance. Once the Government was seized of the matter, a designated Authority began investigating the case relating to sheet glass. Before and during the probe period and the publication of the gazette notification of the final findings of the designated authority, the racket of under-invoicing that was obviously leading to huge revenue losses in terms of customs duty on import of sheet glass, was allowed to continue. Even now, once it has been concluded that sheet glass was being exported to India from China below its normal value, there is nothing to suggest that steps are being taken by the Government to catch the culprits, if any of them was acting in collusion with the Chinese exporters. It does not require rocket science to say with a fair degree of certainty that the Chinese exporters of sheet glass would have no business or interest to under-invoice their goods. This is not possible unless they were receiving the balance amount (the difference between real value and below normal value) through parallel channels and one of these routes could be “Havala”, which is money laundering.
It appears that the Ministry of Finance and department of Revenue has chosen to look the other way when it comes to catching the culprits, who have pocketed the money that should have been collected as Customs duty and used for larger public good.
Even earlier in August 2003, a written petition was received by the designated authority from All India Flat Glass Manufacturers’ Association (AIFGMA) on behalf of the domestic industry, alleging dumping of Float Glass originating in and exported from People’s Republic of China and Indonesia.
At that time two companies Saint Gobain Glass India Ltd., Kanchipuram, Tamil Nadu; and Float Glass India Ltd. of Mumbai had specifically consented to participate in the anti-dumping investigations while another domestic producer Gujarat Guardian Ltd. from Bharuch district in Gujarat had supported the petition.
The importers covered under this investigation included Monika Exim International Ltd., Pune, Liberty Glass House, Mumbai, Impact Safety Glass Works Pvt. Ltd., Bangalore, Mahaveer Mirror Industries, T.L.Verma & company (P) Ltd, Samarth Industries, Mumbai, Rajvi Enterprise, Mumbai, and Chinoy Chablani & Company, Calcutta. One of the main defence of these importers was that the designated Authority should consider the Normal Value as that of PT Mulia instead of highly inflated cost of manufacture of the domestic petitioners. Another contention was that the Authority failed to disclose its reasoning for calculating the Normal Value, export price and margin of dumping on weighted average basis.
Some of the importers of Float glass had filed writ petitions and appeals before the High Court of Madras challenging the validity of the Preliminary findings and the Notification November 20,2002. Responding to the petitions, the High Court had issued interim orders granting interim stay in early 2003, Thereafter the writs by Mahavir Mirror Industries and Monika Exim International Limited were dismissed by the High Court of Madras.
Subsequently, in the WA Misc Petition 2091 and 2092/2003 of Mahavir Mirror Industries and WA Misc Petition 2093 and 2094/2003 of Monika Exim, the High Court passed following orders on 16th April, 2003:
Having heard either counsel in all these matters and having regard to the facts and circumstances of the case and balance of convenience, we direct, that in all these cases, the goods be released on furnishing bank guarantee towards Anti –Dumping Duty. We make it clear that in the event of writ appeals being allowed, the bank guarantee shall be revoked or otherwise on the failure of the payment of Anti-Dumping Duty, the bank guarantee will have to be invoked.
The designated Authority concluded in the case of float glass imports that the most significant cause of injury to the domestic industry has been the price under cutting and price under selling. As a result of lower landed value of imports of subject goods from subject countries, the domestic industry has not been able to realize a fair and reasonable price for its products. This has led to very marginal return on investment. The investments in the Float glass Industry are quite heavy and the low return achieved on the investment by the industry reflects the injury suffered by the industry.
These economic parameters cumulatively and collectively establish that domestic industry suffered material injury on account of dumping.
Newsroom24x7 has published this investigative report in public interest. In the instant case, the conclusions are restricted to the import of sheet glass from China. What has been revealed by the latest investigation is obviously the tip of the iceberg. Question that needs to be answered by the Government in the public domain is what about other goods that are being imported and dumped in the Indian market through under-invoicing. The Government of India is aware that money laundering is backed by the unscrupulous business persons. The problem of money laundering has turned into a menace in India as some exporters resort to over-invoicing while many importers go for the under-invoicing route. The black money that gets generated by this is channelised across the world through havala transactions and this certainly jeopardizes international security.